- Centurion Member
- Posts: 538
- Joined: Fri Mar 09, 2012 9:29 am
- Location: San Francisco, CA
Some bad info here. Paying off collection does not make it fall off your credit report sooner. It will fall off at the same time whether or not you pay it off. Derogatory information will generally fall off in 7 to 7 1/2 years from the time of first deliquency. It has nothing to do with whether or not it is paid off.
In fact, paying off collection may do nothing for your credit score. It just depends if the way the collection account is listed on your credit report. It the balance is included in your utilization calculations, then it doesn't matter which you pay off (colleciton or current cards). If it is not figured into utilization calculations, then paying off collection will do nothing for credit score. How it is listed depends on what stage it is in collection and whether or not collection company is playing games whether or not it is included in utilization calculations. Basically, credit score wise, better to pay your current debt over collections as it either doesn't make a difference which is paid in one scenario and makes no difference to score in other scenario where paying the current debt would have made a difference.
Assuming it is truly a collection account listed correctly, I would be paying down current debt over collection amounts. The fact is the longer the collection account goes uncollected, the more leverage you have to settle for less or pay for deletion. There is one big caveat. Some lenders and lending products basically require no unpaid collections. Unpaid collections will result in automatic denial. A great example of this is FHA mortgage loans.
Amex Centurion, Amex Platinum, Amex BCP 8k->24k (5/23/12), Amex TE 15k, Cap One 1.5% 15k->20k (8/7/13), CSP 25k, Chase Palladium 100k, Citibank AA 35k (AU), Firestone 1.8k->2.2k->2.4k (8/20/12), JFCU Jloc 30k, PenFed Plat Rewards 30k, SF Fire 30k, US Bank Cash+ 25k